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But are they really helping? To orthodox capitalists, the glut can be remedied only by cutting supply or increasing demand. Fair Traders counter that giving consumers product information to make a choice is merely classic marketing. Fair Trade coffee is a better product because growers can afford to invest in their farms, argues Paul Rice, the head of a nonprofit that certifies Fair Trade. Moreover, consumers are connoisseurs. "They don't just want French roast. They want Guatemalan Antiguan, and they know where Antigua is," he says. "Fair Trade fits that because we tell a story about helping people to help themselves--not a story about poverty that makes you feel guilty."
If Fair Trade is taking off in the U.S.--and it is--much of the credit goes to Rice, 43, a Texan who, as a Yale senior, went to Nicaragua to study Sandinista land reform. He stayed a decade, setting up a cooperative for 2,500 coffee farmers. Five years ago, armed with an M.B.A. from the University of California, Berkeley, Rice raised money from the Ford Foundation and others to set up TransFair USA, a certification agency. Under the system, first launched in Europe, co-ops in 25 countries agree to divide their profits equitably and open their books to inspectors. To earn the label, companies must prove they paid at least $1.26 per lb. ($1.41 for organic) and also offered preharvest financing.
Last year Rice's agency certified $208 million worth of Fair Trade coffee. That's not much, given the $19.2 billion American coffee market. But Fair Trade sales have tripled in the past three years and constitute a growing slice of the booming $8.4 billion gourmet-coffee market. Today Fair Trade coffee is imported and roasted by 280 U.S. companies and sold at 18,000 retail outlets.
This year sales are expected to spurt, thanks to two new converts. Ahold USA--part of the Dutch conglomerate that controls Giant Food, Stop & Shop and other chains--will launch five varieties of organic Fair Trade beans (cost: $7.99 per lb.) under its Javana brand in 1,200 supermarkets. And Dunkin' Donuts, the No. 1 U.S. retailer of coffee by the cup, is rolling out an all--Fair Trade espresso line ($1.79 to $2.69 a cup) in 4,200 shops to go testa a testa with the baristas of Starbucks. "This is the beginning of a movement, and we want to get in on it," says marketing director Ed Valle. "We expect to serve 30 million Fair Trade lattes and cappuccinos this year."
The big guns are stepping in not merely because they pity poor farmers but because they sense a competitive edge. Ahold's Stop & Shop competes in the Northeast against Shaw's Supermarkets, which already offers Fair Trade. "We want our consumers to have choices," says Ahold vice president Tom Smith. Wild Oats Markets offers Fair Trade coffee to distinguish itself from Whole Foods Market, which does not. And in January Wild Oats became the first chain to offer Fair Trade bananas. "They can't compete with Wal-Mart on conventional prices," notes Rice. "Fair Trade gives added value--and gets them out of the race to the bottom."